European Shares Set To Extend Gains

3/27/2012 2:26 AM ET

European shares are set to edge higher on Tuesday, extending the previous session's rebound, after the U.S. Federal Reserve reiterated that its ultra-loose monetary policy would continue to support the U.S. economy. Chairman Ben Bernanke did not hint at additional policy easing, but indicated that he was in no rush to tighten policy.

Asian markets are rallying, with gains seen across the board, as the Fed's commitment to maintain accommodative policy bolstered investor risk appetite. The dollar fell against the euro but is holding steady against the yen.

On the macroeconomic front, survey results from the Bank of Korea showed that South Korean consumer sentiment improved for the second month in March. The consumer confidence index, which measures consumers' overall economic outlook, living conditions and future spending, improved to 101 from 100 a month ago.

Investors await U.S. consumer confidence and house price data due later in the global day for clues to near-term economic outlook. Closer home, Spain will hold a bond auction today, with the government aiming to raise a maximum of EUR 1.75 billion from 3-month T-bill auction and EUR 1.25 billion from 6-month T-bill issue.

In corporate news, German lender Deutsche Bank AG has agreed to pay $32.5 million to investors to settle a mortgage lawsuit brought by two union retirement funds who alleged that they were misled about the quality of mortgage loans sold to them in 2006, according to media reports.

BMW AG said that it is recalling about 1.3 million cars worldwide for repair due to a possible problem with a battery cable cover. The recall covers all BMW 5 and 6 Series models built between 2003 and 2010.

Airline Deutsche Lufthansa AG said it plans to cancel about 400 flights worldwide today because of a strike across Germany by the Verdi trade union.

French lender Societe Generale SA plans to set up a new financial institutions division that will focus on providing funding and advice to other financial institutions, the Bloomberg reported, citing people familiar with the matter.

Anglo-Australian mining giant Rio Tinto said it is looking into selling its diamond business, and has begun a strategic review of the business to exploring several options for the potential divestment.

The U.K. government, which has an 82 percent stake in Royal Bank of Scotland Group Plc, is in talks to sell up to one third of its holding in the lender to Abu Dhabi, reports suggest.

European shares ended on a firm note Monday after a closely-watch survey showed German business confidence rose for the fifth month in a row. The Euro Stoxx 50 index of eurozone bluechip stocks rose 0.6 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, gained 0.7 percent, while around Europe, Switzerland's SMI, France's CAC 40, the U.K.'s FTSE 100 and the German DAX rose between 0.7 percent and 1.2 percent.

U.S. stocks posted strong gains overnight, as Bernanke's comments on interest rates helped investors shrug off the release of a report from the National Association of Realtors showing an unexpected drop in pending home sales in February. The Dow rose 1.2 percent, the tech-heavy climbed 1.8 percent and the S&P 500 surged up 1.4 percent.